Single-Family Rental Rates Up 4.1% in First Half
Michael Tucker email@example.com
Low rental home inventory relative to demand fueled the growth of single-family rental rates in the first half, reported CoreLogic, Irvine, Calif.
The firm's Single-Family Rent Index found rents have climbed since 2010. But year-over-year rent increases have slowed since peaking at 4.2 percent in February 2016. SFR rent increases stabilized in the first half of 2018 with an average year-over-year increase of 2.8 percent.
SFR properties with rents greater than 125 percent of a region's median rent saw cumulative rent growth of 4.2 percent between January and June. Rent increases among SFR assets priced below 75 percent of the regional median totaled 3.4 percent.
But on a year-over-year basis, high-end rent growth lagged behind lower-end rent growth, said CoreLogic Principal Economist Molly Boesel, noting high-end rents increased 2.8 percent year over year in June compared with 3 percent year-over-year on the low end.
"High demand and low supply of lower-priced single-family rental properties continue to push up rents for this segment of the rental market," Boesel said. "With these market forces expected to stay in place in the near term, rents on lower-priced rental properties should continue to outpace those of higher-end rental properties."
Among large metro areas, Las Vegas had the highest year-over-year increase in single-family rents between January and June, followed by Orlando, Fla. and Phoenix. After experiencing seven consecutive months of decreasing year-over-year SFR rent prices, Honolulu, Hawaii saw its first year-over-year rent price increase in May at 1 percent. Rent prices in Honolulu continued to increase in June at 1.4 percent year-over-year.
Metro areas with limited new construction, low rental vacancies and strong local economies that attract new employees tend to have stronger rent growth, CoreLogic reported. During the first half of 2018, Orlando and Phoenix saw "tremendous" year-over-year rent price growth averaging 5.2 and 4.7 percent, respectively, the report said. Average employment growth equaled 3.5 and 3.0 percent respectively in those cities, significantly exceeding the 1.6 percent national growth rate.
CoreLogic said SFR rents continue to increase in areas affected by last year's hurricanes, including the Houston metro area, which saw a 3.3 percent cumulative growth rate during the first half of the year.
"The market shows impressive year-over-year increases in the first half of 2018," the report said, noting a 4.4 percent year-over-year rent growth peak in May before it settled at 3.9 percent in June.